Russia and Ukraine delegation meets to discuss ceasefire

Notes/Observations

- Monitoring cease-fire talks between Ukraine and Russia in Turkey; Russian ruble currency at a 4-week high.

- Various European confidence readings missing consensus as Ukraine conflict and higher inflation dents sentiment in region.

- German Feb Import Prices lower than consensus and Jan levels; remain elevated due to energy prices.

- Yen weakness halts for the time being as markets analyze the possibility of coordinated intervention by Japan and the US as rhetoric picks up.

Asia

- Japan Feb Jobless Rate: 2.7% v 2.8% prior..

- BOJ Summary of Opinions: CPI likely to accelerate clearly from April, may move around 2% for some time. Must maintain monetary easing as was not likely to see CPI continuously exceed 2%.

- Australia Feb Retail Sales M/M: 1.8% v 0.9%e.

- BOJ conducted two unlimited fixed rate operations to reaffirm its commitment to the 0.25% upper range for the 10-year yield.

- Japan Top Currency Official Kanda stated that FX stability was important; discussed importance of maintaining previous G7 and G20 commitment of exchange rates with US Treasury; to closely monitor FX. Excessive volatility and disorderly moves were undesirable (Note: standard G7 language).

- Japan Fin Min Suzuki: Will closely watch market moves to avoid negative yen weakness.

- BOJ Official Amamiya stated that was vital to be humble in assessing inflation; reiterated stance that CPI could rise to about 2% from Apr.

Russia/Ukraine

- Delegations from Russia and Ukraine arrive in Istanbul for the first face-to-face talks in more than two weeks.

- Russia/Ukraine said to be discussing a pause in fighting as part of possible deal that would see Ukraine give up its bid for membership of NATO in return for security guarantees and the prospect of joining the EU as long as it was a non-military alliance.

Americas

- US Senator Schumer sets vote on advancing nomination of Lisa Cook to the Fed; the vote is scheduled for Tues (Mar 29th).

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [Stoxx600 +1.14% at 459.34, FTSE +0.90% at 7,540.21, DAX +1.28% at 14,601.92, CAC-40 +1.70% at 6,700.97, IBEX-35 +0.83% at 8,435.19, FTSE MIB +1.63% at 25,116.00, SMI +0.83% at 12,256.28, S&P 500 Futures +0.30%].

Market Focal Points/Key Themes: European indices open broadly higher and stayed upbeat through the session; hope of a potential ceasefire in Ukraine has fueled some risk appetite; sectors among those leading to the upside are consumer discretionary and industrials; while laggard sectors include health care and materials; Cargotec and Konecranes cancel planned merger; McKay receives approach from Slate; focus on continuing peace talks between Russia and Ukraine; earnings expected during the upcoming US session include McCormick and Conn’s.

Equities

- Energy: Nordex [NDX1.DE] +7% (earnings; outlook), SSE [SSE.UK] +1% (trading update).

- Financials: Barclays [BARC.UK] -4.5% (placement).

- Healthcare: Carmat [ALCAR.FR] +21% (restarts production).

- Industrials: Konecranes [KCR.FR] +1.5%, Cargotec [CGCBV.FI] +2.5% (cancel merger), Porsche [PAH3.DE] +1.5% (earnings).

- Materials: Wacker Chemie [WCH.DE] +1% (targets).

Speakers

- ECB's De Cos (Spain) stated that the Ukraine conflict shock increased the risk of 2nd round effects. Reiterated Council stance that under all scenarios it saw inflation stabilizing around target in 2024. Interest rate adjustment would be gradual.

- Swiss Federal Finance Administration stated that goss debt should begin to decline from 2023 onward.

- Turkey President Erdogan addressed the Ukraine and Russian negotiators ahead of talks; called for immediate cease fire.

- Russia Finance Ministry stated that it had fully met the liability on servicing the 2035 euro bond issue.

- Russia Defense Min Shoigu stated that the main task now is to liberate Donbas.

- Ukraine spokesperson Podolyak stated that the negotiators in Turkey are discussing ceasefire in talks with Russia.

- Japan Chief Cabinet Sec Matsuno has no comments on specific FX levels. He noted that the Govt to take appropriate steps on FX based upon international agreements with US and other authorities.

- Australia budget forecast saw 2022/23 budget deficit at A$78.0B vs. A$98.9B prior Dec outlook. Forecasted 2022/23 CPI at 3.0% and GDP growth at 3.5%.

- Saudi Oil Min Abdulaziz stated that the energy supply risks could impact the global economy. Lack of international focus on oil-facility attacks.

- China said to target 2022 crude oil output at 200M and natural gas output at 214Bcm.

Currencies/ Fixed income

- Focus remained on bond yields as they continued to inch higher. Risk appetite getting a boost as Russia and Ukraine resumed face=to-face negotiations for the 1st time in two weeks.

- USD/JPY back with a 123 handle after Monday’s test at a 7-year high above 125 area. Japanese officials ramped up its rhetoric and reiterated G7 manta on undesirable volatility in FX.

- EUR/USD hovering around the 1.10 area with a slew of inflation readings coming up in the next few sessions. ECB officials continued to note that inflation was seen back at target level in 2024 under all scenarios and any rate adjustment would be gradual.

Economic data

- (DE) Germany Apr GfK Consumer Confidence: -15.5 v -14.5e(5th straight negative reading).

- (DE) Germany Feb Import Price Index M/M: 1.3% v 1.6%e; Y/Y: 26.3% v 27.2%e.

- (FR) France Mar consumer confidence: 91 v 94e.

- (ES) Spain Feb adjusted retail sales Y/Y: 0.9% v 1.0%e; Retail Sales (unadj) Y/Y: 1.7% v 3.5% prior.

- (AT) Austria Mar manufacturing PMI: 59.3 v 58.4 prior (21st straight expansion).

- (UK) Feb Net consumer credit: £1.9B v £0.9Be; Net Lending: £4.7B v £5.4Be.

- (UK) Feb mortgage approvals: 71.0K v 74.7Ke.

- (UK) Feb M4 Money Supply M/M: 1.0% v 0.1% prior; Y/Y: 6.0% v 5.7% prior; M4 (ex-IOFCs) 3-Month Annualized: 2.4% v 3.5% prior.

- (IS) Iceland Mar CPI M/M: 0.9% v 1.2% prior; Y/Y: 6.7% v 6.2% prior.

Fixed income issuance

- (EU) EFSF opened book to sell EUR-denominated Sept 2028 bond; guidance seen -17bps to mid-swaps.

- (ID) Indonesia sold total IDR17.1T vs. IDR20.0T target in bills and bonds.

- (IT) Italy debt agency (Tesoro) sold €5.0B vs. €5.0B indicated in 6-month bills; Avg Yield: -0.488% v -0.484% prior; Bid-to-cover: 1.47x v 1.46x prior.

Looking ahead

- (CH) Switzerland to sell 6-month Bills.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2032, 2035 and 2048 bonds.

- 05:30 (ZA) South Africa Q4 unemployment: 35.1%e v 34.9% prior.

- 06:30 (ZA) South Africa Q4 non-fam payrolls Q/Q: No est v 0.5% prior; Y/Y: No est v 0.6% prior.

- 06:45 (US) daily libor fixing.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (US) Jan FHFA House Price Index M/M: 1.3%e v 1.2% prior.

- 09:00 (US) Jan S&P/Case-Shiller House Price Index (20-City) M/M: 1.50%e v 1.46% prior; Y/Y: 18.55%e v 18.56% prior.

- 09:00 (US) Jan S&P/Case-Shiller House Price Index (overall) Y/Y: No est v 18.84% prior.

- 09:00 (EU) Weekly ECB Forex Reserves.

- 09:00 (EU) ECB weekly QE bond buying update.

- 09:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 10:00 (US) Feb JOLTS Job Openings: 11.00Me v 11.263M prior.

- 10:00 (US) Mar Consumer Confidence: 107.0e v 110.5 prior.

- 10:45 (US) Fed’s Harker.

- 11:00 (MX) Mexico Weekly International Reserve data.

- 13:00 (US) Treasury to sell 7-Year Notes.

- 13:30 (BR) Brazil Feb Total Federal Debt (BRL): No est v 5.616T prior.

- 15:00 (AR) Argentina Jan Economic Activity Index (Month GDP) M/M: -1.0%e v +0.9% prior; Y/Y: 5.7%e v 9.8% prior.

- 16:30 (US) Weekly API Oil Inventories.

- 17:00 (CL) Chile central bank (BCCh) Interest Rate Decision: Expected to raise Overnight Rate Target by 175bps to 7.25%.

- 17:45 (NZ) New Zealand Feb building permits M/M: No est v -9.2% prior.

- 19:01 (UK) Mar BRC Shop Price Index Y/Y: No est v 1.8% prior.

- 19:50 (JP) Japan Feb Retail Sales M/M: -0.3%e v -0.9% prior (revised from -1.9%); Y/Y: -0.3%e v +1.1% prior (revised from 1.6%).

- 19:50 (JP) Japan Feb Dept. Store, Supermarket Sales Y/Y: 0.5%e v 2.6% prior.

- 20:00 (NZ) New Zealand Mar Business Confidence: No est v -51.8 prior; Activity Outlook: No est v -2.2 prior.

- 21:10 (JP) BOJ Outright Bond Purchase Operation in 3~5 Years and 5~10 Years maturities.

- 21:30 (US) Fed’s Bostic.

- 23:00 (TH) Thailand to sell THB4.0B in 2052 Bonds: Expected to raise Overnight Rate Target by 175bps to 7.25%.

- 17:45 (NZ) New Zealand Feb Building Permits M/M: No est v -9.2% prior.

- 19:01 (UK) Mar BRC Shop Price Index Y/Y: No est v 1.8% prior.

- 19:50 (JP) Japan Feb Retail Sales M/M: -0.3%e v -0.9% prior (revised from -1.9%); Y/Y: -0.3%e v +1.1% prior (revised from 1.6%).

- 19:50 (JP) Japan Feb Dept. Store, Supermarket Sales Y/Y: 0.5%e v 2.6% prior.

- 20:00 (NZ) New Zealand Mar Business Confidence: No est v -51.8 prior; Activity Outlook: No est v -2.2 prior.

- 21:10 (JP) BOJ Outright Bond Purchase Operation in 3~5 Years and 5~10 Years maturities.

- 21:30 (US) Fed’s Bostic.

- 23:00 (TH) Thailand to sell THB4.0B in 2052 Bonds.